International Game Technology (IGT; Ba1/BB+ CW Pos/BBB-) Q2 (to June) Results

• Q2 revenue at $1.05b (-1%), adj. EBITDA at $446m on a 42.5% margin (+30bps), EBIT at $230m on a 22% margin; all in line with expectations.
• Business IGT bondholders will be left with - Lottery - was down -2% on headline and -7% on EBIT (runs a higher 35% margin though).
• Now sold Gaming was +1% on headline and +16% on EBIT.
• Net debt is little changed at $5.1b/2.9x.
• Guidance is being withdrawn - reiterates nothing to do with changes to expectations since 1Q, but on time need for accounting changes to class gaming as discontinued operations.

Some more asides from earnings call:

• On timing of close, notes Apollo is in the gaming business and has experience with regulators. It sees it roughly a year away but could be as far out as 15months. Current stated guidance is 3Q25.
• It sees 2H lottery conditions being better and up yoy.
• It's confirmed remaining Lottery business/remain co had LTM EBITDA of $1.2b and leaves math unch on $2b directed to debt paydowns; leverage will stay little changed at gross ~3x and mgmt in call indicates it's happy there.

We don't see much value left in € lines, $27s looks cheapest on curve and unlikely to be touched on gross paydowns given debt ahead. Callable at par in 2 years.

Equity takes here